B-167956, OCT. 24, 1969

B-167956, OCT. 24, 1969

INTEREST--PAYMENT DELAY--WATER RENTAL CHARGES--IRRIGATION PROJECTS IRRIGATION DISTRICT WHICH PAID WATER RENTAL INSTALLMENT 1 CALENDAR DAY AFTER EXPIRATION OF 30-DAY INTEREST-FREE PERIOD, LATE PAYMENT OCCASIONED BY CLOSING ON SHORT NOTICE OF PAYMENT OFFICE ON LAST BUSINESS DAY, DAY PAYMENT WAS CUSTOMARILY MADE, TO COMMEMORATE DEATH OF GENERAL EISENHOWER WITH NATIONAL DAY OF MOURNING, IS NOT PROPERLY CHARGEABLE WITH PENALTY, SINCE FAILURE TO PAY WAS NOT DUE TO FAULT, MISCONDUCT, OR NEGLIGENCE ON PART OF IRRIGATION DISTRICT WHICH PROMPTLY PAID AFTER CAUSE OF DELAY CEASED.

TO MR. A. E. DAZELL:

WE REFER TO YOUR LETTER OF SEPTEMBER 19, 1969, WITH ENCLOSURE (YOUR REFERENCE 2-363), FORWARDING FOR OUR DECISION A CLAIM FOR RELIEF FROM THE INTEREST PENALTY OF $1,378.00 ASSESSED AGAINST THE LOWER TULE RIVER IRRIGATION DISTRICT (DISTRICT) FOR LATE PAYMENT OF AN INSTALLMENT OF WATER RENTAL CHARGES UNDER ARTICLE 14 OF CONTRACT NO. 175R-2771, AS AMENDED.

ARTICLE 14 OF THE CONTRACT AS AMENDED IN FEBRUARY 10, 1954, STATES: "14. UPON EACH CHARGE TO BE PAID BY THE DISTRICT TO THE UNITED STATES PURSUANT TO THIS CONTRACT WHICH SHALL REMAIN UNPAID AFTER THE SAME SHALL HAVE BECOME DUE AND PAYABLE, THERE SHALL BE IMPOSED A PENALTY OF ONE-HALF (1/2) OF ONE (1) PERCENT PER MONTH OF THE AMOUNT OF SUCH DELINQUENT INSTALLMENT FROM AND AFTER THE DATE WHEN THE SAME BECOMES DUE UNTIL PAID, AND THE DISTRICT HEREBY AGREES TO PAY SAID PENALTY: -- -- -- PROVIDED FURTHER, THAT NO PENALTY SHALL BE CHARGED TO OR BE PAID BY THE DISTRICT UNLESS SUCH DELINQUENCY CONTINUES FOR MORE THAN THIRTY (30) DAYS.'

YOU REPORT THAT THE INSTALLMENT DUE ON MARCH 1, 1969, WAS DELIVERED AND PAID ON TUESDAY, APRIL 1, 1969, WHICH WAS ONE CALENDAR DAY BEYOND THE 30- DAY INTEREST-FREE PERIOD. THEREFORE, THE DISTRICT WAS ASSESSED A PENALTY OF ONE-HALF OF ONE PERCENT OF THE DELINQUENT INSTALLMENT PURSUANT TO ARTICLE 14 AS AMENDED.

BY LETTER OF JUNE 23, 1969, THE DISTRICT PROTESTED THE ASSESSMENT OF THE INTEREST PENALTY, ON THE GROUND THAT IT WAS UNABLE TO MAKE PAYMENT ON MONDAY, MARCH 31, 1969, WITHIN THE 30-DAY INTEREST-FREE PERIOD, BECAUSE THE FRESNO OFFICE OF THE BUREAU OF RECLAMATION WAS CLOSED ON THAT DAY TO COMMEMORATE THE DEATH OF GENERAL EISENHOWER. THE DISTRICT FURTHER STATED THAT IT WAS PREPARED TO MAKE THE PAYMENT ON MARCH 31 IN ACCORDANCE WITH ITS LONG ESTABLISHED PROCEDURE OF PAYING THE INSTALLMENT ON THE LAST BUSINESS DAY WITHIN THE 30-DAY PERIOD PROVIDED BY THE CONTRACT.

PRESIDENTIAL PROCLAMATION NO. 3907, FILED ON FRIDAY, MARCH 28, 1969, AT 3:28 P.M. IN THE FEDERAL REGISTER, DESIGNATED MONDAY, MARCH 31, 1969, AS A NATIONAL DAY OF MOURNING. AS A RESULT, THE FRESNO OFFICE, THE PLACE DESIGNATED FOR THE RECEIPT OF THE INSTALLMENT, WAS CLOSED ON THAT DAY.

IT IS TO BE OBSERVED THAT THE PROCLAMATION WAS ISSUED LATE FRIDAY AFTERNOON AND THAT THE FRESNO OFFICE PRESUMABLY WAS CLOSED ON THE INTERVENING DAYS, I.E., SATURDAY AND SUNDAY. HAD THE DISTRICT BEEN GIVEN SUFFICIENT NOTICE THAT THE FRESNO OFFICE WOULD BE CLOSED ON MONDAY, THE LAST DAY OF THE 30-DAY INTEREST-FREE PERIOD, THE DISTRICT IN ALL LIKELIHOOD WOULD HAVE BEEN ABLE TO MAKE ARRANGEMENTS TO PAY THE INSTALLMENT ON FRIDAY.

IN SLAUGHTER V C.I.T. CORPORATION, 157 SO. 462, THE COURT DISCUSSED THE EFFECT OF A PRESIDENTIAL PROCLAMATION DECLARING A BANK HOLIDAY FROM MARCH 1 TO MARCH 10, 1933, ON AN INSTALLMENT DUE ON MARCH 4, 1933, AND STATED THAT SUCH A DELAY CAUSED BY THE IMPOSSIBILITY OF MAKING PAYMENT ON TIME IS EXCUSABLE FOR THE DURATION OF THE BANK HOLIDAY. SEE ALSO 6 CORBIN ON CONTRACTS, SEC. 1349. MOREOVER, THE RULE STATED IN 10 C.J.S., BILLS AND NOTES, SEC. 345 (C), IS THAT IT IS A GOOD DEFENSE TO THE MAKER OF A NOTE, AS FAR AS COSTS AND DAMAGES ARE CONCERNED, THAT HE WAS PREPARED WITH THE FUNDS AND READY TO MAKE PAYMENT OF THE PAPER AT THE TIME AND PLACE SPECIFIED BUT THAT THE HOLDER WAS NOT THERE TO RECEIVE THE MONEY.

ALTHOUGH PAYMENT WAS NOT MADE WITHIN 30 CALENDAR DAYS, THE DISTRICT WAS PREVENTED FROM PAYING THE INSTALLMENT ON THE 30TH DAY BY THE ACTS OF THE GOVERNMENT WITHOUT ANY DEFAULT, MISCONDUCT, OR NEGLIGENCE ON THE PART OF THE DISTRICT. WHEN THE CAUSE OF THE DELAY CEASED, THE DISTRICT PAID THE INSTALLMENT PROMPTLY WITH REASONABLE DILIGENCE.

IN THE CIRCUMSTANCES WE CONCLUDE THAT THE DISTRICT WAS NOT PROPERLY CHARGEABLE WITH THE PENALTY, AND THE AMOUNT THEREOF MAY THEREFORE BE REMITTED.